Ethics, Social Responsibility & Sustainability in Payday Loan Industry

Running Head: ETHICS, SOCIAL RESPONSIBILITY & SUSTAINABILITY
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Ethics, Social Responsibility & Sustainability
6/20/2018

ETHICS, SOCIAL RESPONSIBILITY & SUSTAINABILITY 1
1) Capitalism fundamentals which are significant to this case are :
The essentials of capitalism important to this case are profit and the customer
dominance. For every company, profit is the foremost important aspect which needed to be
achieved before going for any other objective. The payday loan companies add up to
$2billion across 1400 stores with around two million customer base in the market of Canada
and so this proves that these companies are earning huge profits over small loans funding.
Payday loans are a favourable and short-term option for people whose requirements
are the small loan and when they are restricted to mainstream credit (Bhutta, Skiba &
Tobacman, 2015). But this industry wants to turn these short-term loans into long-term debt
for the earning of more profits. The second fundamental of capitalism which is related to this
case is the consumer dominancy which implies that consumers can influence these
corporations with their decisions as there are numerous numbers of money lending industries
are present in the economy and these serve as alternatives as well as competitors.
2) List of those stakeholders which are benefitted as well as harmed
by the payday loan industry :
From payday loan industry, various stakeholders will be benefited and these
beneficiaries include investors and borrowers (Letterman, 2016). Here the borrowers get the
benefits in the form of prior payment which helps them in various ways like paying their bills
on time, make any necessary purchases before they actually receive a paycheque. This will
eliminate the panic of harrowing over meeting charge due dates and thus leads to saving
various costs. Also for the investors, payday loans are a money-making source in the banking
industry and many investors are always ready to grab that opportunity to earn more and thus
it is very beneficial to them as more high the interest charge on customers, more profits will
be there for the investors.
Some stakeholders like banks and government are harm by this payday loan industry
(Cohen, 2018). As customers are easily able to get payday loans without doing much
formality and documentation and also there are no collateral rights over the property from the
side of lender whereas, in commercial banks, it is vice-versa and this effect on other products
of banks also like insurance, mortgage etc. Also in near future, there are various more
products to be added like foreign exchange, insurance, mortgage referrals etc. and this will
benefit to the borrower only. The other stakeholder which also gets harm from payday loan
bank is the government as they have to implement more control on the industry regarding
plans and policies so as to safeguard the borrowers from the lenders and this will also treat as
a cost to the government.